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Thanks for digging that up. I had read about the milestones in the SolarCity report but didn't look up the implications. About the obligations that SolarCity took towards the state of New York. Is there any public reporting on those (like with Nevada)? And secondly, assuming there are certain minimums in terms of number of employees in state etc, can they satisfy those conditions by retaining regular Tesla employees (sales staff, service center, etc.)

I gotta say that Tesla's buyout of Solarcity is looking more like a bailout every day. Given that it sounded like it was Elon who pushed the Rive brothers to buy Silevo in the first place (Lyndon gave a presentation where he kinda of implied this), maybe Elon felt honor bound to clean up his own mess.

The only part of Tesla Energy that is working well these days is the PowerPack. Which, frankly, Tesla telegraphed to us at Tesla Energy launch when they said they believed the PowerPack would account for 90% of stationary battery storage.

I gotta say that Tesla's buyout of Solarcity is looking more like a bailout every day. Given that it sounded like it was Elon who pushed the Rive brothers to buy Silevo in the first place (Lyndon gave a presentation where he kinda of implied this), maybe Elon felt honor bound to clean up his own mess.

The only part of Tesla Energy that is working well these days is the PowerPack. Which, frankly, Tesla telegraphed to us at Tesla Energy launch when they said they believed the PowerPack would account for 90% of stationary battery storage.

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A bailout? Probably. But still maybe not a terrible deal for Tesla. Here is my thinking: (I am not a SCTY expert by any means)

The Rive's just seem like they weren't very good at doing what they were doing. A merger allows them to be quietly deemphasized.

SCTY was dependent on short term financing to gain long term assets. They were in constant threat of liquidity drying up, no growth, plunging stock price. Now under the bigger umbrella, less financing risk, not pressure to keep writing PPA's. Can just do cash sales if they like.

The price was super low. They can just "close" and make money servicing existing PPA's.

the NY plant was not going well (my impression). Panasonic needed to come in and save the day (my impresssion). Elon knew there was no money in being a me-too selling panels, because roofs are a more compelling product. Special cells are probably less important in that case, so Silevo tech isn't necessary, or they just weren't working out as being really manufacturable? Either way, the asset can be swept under the rug. Use Panasonic "chips" in the innovative roof product is a better business plan. SCTY could not or would not take this path. Elon probably realized he couldn't just make his cousins do the right thing.

SCTY going under would have tanked TSLA stockholders, though probably not Tesla the corporation. The bailout is not something I feel like I need to complain about. I was initially upset that the contagion existed, but the solution wasn't so bad.

The downsides:

At some point the Silevo tech is going to need to be written off. Does Tesla have a "goodwill" line in assets?

The large staff of SCTY. They will be necessary to roll out roofs in 12-18 months but it galls me that they are being carried for now. I think they are doing cash sales mainly, and not "pushing" ppa's as hard. So SCTY as a seperate company has sales way, way down probably. So until the storage and roof products are ready to work on, they have to be doing a lot of "leaning" on stuff.

A bailout? Probably. But still maybe not a terrible deal for Tesla. Here is my thinking: (I am not a SCTY expert by any means)

The Rive's just seem like they weren't very good at doing what they were doing. A merger allows them to be quietly deemphasized.

SCTY was dependent on short term financing to gain long term assets. They were in constant threat of liquidity drying up, no growth, plunging stock price. Now under the bigger umbrella, less financing risk, not pressure to keep writing PPA's. Can just do cash sales if they like.

The price was super low. They can just "close" and make money servicing existing PPA's.

the NY plant was not going well (my impression). Panasonic needed to come in and save the day (my impresssion). Elon knew there was no money in being a me-too selling panels, because roofs are a more compelling product. Special cells are probably less important in that case, so Silevo tech isn't necessary, or they just weren't working out as being really manufacturable? Either way, the asset can be swept under the rug. Use Panasonic "chips" in the innovative roof product is a better business plan. SCTY could not or would not take this path. Elon probably realized he couldn't just make his cousins do the right thing.

SCTY going under would have tanked TSLA stockholders, though probably not Tesla the corporation. The bailout is not something I feel like I need to complain about. I was initially upset that the contagion existed, but the solution wasn't so bad.

The downsides:

At some point the Silevo tech is going to need to be written off. Does Tesla have a "goodwill" line in assets?

The large staff of SCTY. They will be necessary to roll out roofs in 12-18 months but it galls me that they are being carried for now. I think they are doing cash sales mainly, and not "pushing" ppa's as hard. So SCTY as a seperate company has sales way, way down probably. So until the storage and roof products are ready to work on, they have to be doing a lot of "leaning" on stuff.

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Good points. I think a question on many of Musk's deals, such as with Panasonic, is how much long term upside Musk gives up to deal with current problems. Huge equity dilution, large debt, protecting Panasonic from downside risk, saving the cousins Rive all works out fine if Tesla becomes a much larger company.

As far as Silevo, Panasonic's HIT tech is very similar. I suppose Panasonic wasn't interested in Silevo innovations

The large staff of SCTY. They will be necessary to roll out roofs in 12-18 months but it galls me that they are being carried for now. I think they are doing cash sales mainly, and not "pushing" ppa's as hard. So SCTY as a seperate company has sales way, way down probably. So until the storage and roof products are ready to work on, they have to be doing a lot of "leaning" on stuff.

The price Tesla paid for SCTY is less the discounted cash flow from the PPAs plus the value of the Buffalo GF.

Call it what you want but TSLA shareholders got a good deal even if Tesla does not use Silevo patents.

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I agree.

Also, as we are now seeing, Tesla Powerpack packaging including charge controllers and inverters within the single package makes installation and use much simpler than are other presently available options. The forthcoming products all emphasize ease of installation and use, this make rapid deployment a major advantage. AES has gained business with rapid deployment but they have no integrated products.

Because production capacity is just building as utility-level storage solutions are becoming economically viable we'll see big advantages through the Panasonic cooperation. Silevo intellectual property might well be useful, but I agree it is not critical now. Rapid production and distribution buildup for Powerpack, Powerwall and solar tiles are the critical path today.

A 20% cut likely includes installers. They don't have an alternate sales channel at this point. It is unlikely that the Solarcity sales processes suddenly became 20% more efficient. Selling residential solar became more competitive in 2016.

After looking at the techs, my guess is that Silevo simply didn't know how to manufacture their design reliably at scale.

Silevo probably had a few patents which Panasonic would find handy. The patents are old enough that Panasonic has already read them, worked out how to use them, and worked out how valuable it would be to license them, and decided it wasn't worth much... but getting the licensing thrown in for "free" as part of another deal is another matter, and may help them make higher-efficiency panels slightly more cheaply.

Seems like SolarCity overpaid substantially for Silevo, but that doesn't mean the patents won't get used.

I'm suspicious Zep will be a complete write-off though. Installation seems to be going in a different direction.

A 20% cut likely includes installers. They don't have an alternate sales channel at this point. It is unlikely that the Solarcity sales processes suddenly became 20% more efficient. Selling residential solar became more competitive in 2016.

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Selling residential solar didn't get competitive in 2016, it ran the whole residential market into the ground. These guys pushed back-and-forth on each other so much that costs went through t roof and undermined all nationwide residential installation momentum.

I suspect Elon scrapped the SCTY sales model as unsustainable and will be selling their solar products primarily via their online sales platform and cross-marketing with vehicle channels. Giving some combination of Tesla eco-system users $1600 for delivering an install is far better than eating $5k in sales costs and hassle. Elon led the US residential solar market down this sales-focused path, hopefully he can lead the whole market back out. With the Trump Effect mobilizing all marginally liberal consumers, it shouldn't be too tough.

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